Question: Is it necessary to have a performance bond or a control firm to manage the funds during a home improvement project?
Answer: The laws regarding construction are quite odd in that any supplier or subcontractor on your project can place a lien on your property if he has not been paid.
It is not unusual for general contractors who have been paid for a project but are losing money, to avoid paying the subcontractor or supplier.
In that case, the subcontractor can execute a lien against your property. This is just as if Chrysler had not paid for the wheels on your car and the manufacturer of the wheels placed a lien on your automobile because the wheels had not been paid for.
In my opinion, the lien laws are particularly unjust to homeowners, but that is the law. The homeowner should be prepared to protect against such action. The best way of doing this is through use of either a performance bond or fund control.
Fontaine is president of the Western Regional Master Builders Assn. and a director of the American Building Contractors Assn. He will answer questions concerning home improvements. Phone 213/653-4084 or write him at 6404 Wilshire Blvd., Suite 850, Los Angeles 90048-5510.